Sensex gains over 1 percent; traders hope for more measures

MUMBAI (Reuters) - The BSE Sensex rose over 1 percent in a volatile session on Friday, marking its highest close in nearly two weeks as blue chip shares surged tracking a rebound in the rupee for a second day, ahead of April-June GDP data.

Ebbing prospects of a U.S.-led military strike against Syria were also seen helping shares even as foreign investors sold over $1 billion worth of shares in the previous 10 sessions through Thursday.

The broader NSE index however fell 4.7 percent for August, marking its biggest monthly fall in six, on continued concerns about a slowing economy, flip-flop policy response and investors pulling out of riskier assets globally on expectation of a scaling back of U.S. monetary stimulus.

Apart from watching the rupee and flows, traders are hopeful that some action on the ground alongside quick-fix solutions like a diesel price hike, export benefits would cheer the share market.

"There is a lot of compulsion to provide continuous support to rupee and thereby stock markets in the near term," said G. Chokkalingam, Executive Director and Chief Investment Officer at Centrum Wealth Management.

The benchmark BSE index rose 1.19 percent, or 218.68 points, to end at 18,619.72, also ending 0.5 percent higher for the week, snapping its five-week losing streak.

The broader NSE index rose 1.16 percent, or 62.75 points, to end at 5,471.80, although closing flat for the week.

Software exporters gained to record highs on improving U.S. business prospects.

Tata Consultancy Services Ltd rose 4.4 percent after earlier hitting an all-time high of 2,050 rupees, while Wipro Ltd gained 2.1 percent after touching a 52-week high at 495 rupees.

Tech Mahindra Ltd rose 0.7 percent after Morgan Stanley resumed coverage of its shares at "overweight" and a target price of 1,650 rupees, saying they remain undervalued and a re-rating can continue.

Oil and Natural Gas Corp Ltd also gained 0.2 percent, adding to Thursday's gains of 2.1 percent, on market speculation the government may announce a hike in diesel prices after parliament's monsoon session.